Hogan v. De Peyster

By the Court, Mitchell, P. J. The testator made his will in 1829, and died January 28,1836. On the 4th of February, 1837, the defendant was appointed administrator with the will annexed. The testator, at his decease, held 1000 shares, of $100 each, in the stock of the Bank of the United States—the National institution. The charter of that bank expired on the 4th of March, 1836. On the 18th of February 1836 the state of Pennsylvania chartered “ The United States Bank,” the institution of that state. This last institution was intended to take the place of the former, and it was generally supposed that it would do so, to a great extent; those who disliked the first extending an equal dislike to the second, and those who had confidence in the first generally reposing an equal confidence in the second. The testator, by the second clause in his will, directed his real and personal estate to be converted into money, as soon as convenient, after his decease, and the proceeds to be securely invested in the most productive manner, “leaving it, however, to the discretion of my said trustees to suffer such part of my [116] personal estate as is now invested in bank stock to remain in its present state, so long as they may deem it most for the interest of my family.” The testator must specially have referred to this stock, as it formed a large part of his estate, and especially of the part invested in bank stock. He must have known what his will was, in the month when he died, and that this discretion applied to this stock ; and he must also have known that the national institution would not then probably be rechartered. He must therefore be considered as sanctioning the continuance of this stock either in the same bank if re-incorporated, or in one substantially similar, or which might be regarded as in some sense its successor. If congress had rechartered the same bank, the case would have been clear. If it had chartered a new institution on a similar plan, with a right to subscribe open to all, and by arrangement between the new and old banks this subscription had' been transferred to the new, his intention would probably have been that such transfer should be made. Here the difference was that a state institution took the place of the national one, and by arrangement between them the stock was thus transferred. There was no more reason to apprehend loss from the institution having a state charter than from its having a national one. The executors, therefore) could not be charged with any breach of duty in not interfering to prevent (if they could have prevented) this arrangement between the two institutions, or in not claiming payment of the value of their stock from the old institution. The defendant did nothing to aid the transfer, and when asked to take measures to make the old bank liable (as he had not assented to it) no proof is shown that he did not take a course satisfactory, at the time, to the plaintiffs, lie was advised by counsel that it was inexpedient to attempt such a suit after dividends had been accepted from the state institution. The administrator barely suffered the stock to remain in the state in which it was at the testator’s decease, and to pass as the rest of that stock did, except the part subscribed by the United States; and then, finding it so transferred as by a common consent of the stockholders, he received the dividends [117] on the new stock. This was not a new investment by him. The case of Ackerman v. Emott, (4 Barb. 626,) shows the distinction between the two cases, and that an executor is liable for an unauthorized investment by himself, on personal securities or bank stock, but admits that he is not liable for permitting such investments made by his testator, to continue. Parker, V. C. says, (p. 635,) the case of Powell v. Evans, (5 Ves. 838,) held that executors who neglected to call in money lent by the testator on a bond, should be charged with the loss that might be sustained by the subsequent failure of the obligors. He adds, “ this doctrine has not perhaps' been carried to this extent in this state. The case of Thompson v. Brown, (4 John. Ch. Rep. 619,) may be regarded as somewhat modifying it.” “ If the rule has not been so rigidly enforced here, as to collecting money already invested by the testator, I think it has been equally strict with the English courts, in insisting upon proper investments, when made by the trustee.” “An examination of that case, (Thompson v. Brown,) however, shows that it was not a case of investment made by the administrators. They only permitted the business to be carried on as they found it. Chancellor Kent there says, ‘ This was not a new and distinct original trading with the assets voluntarily entered into by the administrators. They found a store of goods in possession of a surviving partner, and they had no alternative but either to suffer him to go on and sell on the usual terms and under a continuation of the confidence reposed in him by the intestate, or to divide the goods and sell the store of E. at auction.” The vice chancellor thus approves of that case and of the distinction between it and the one before him, and on that distinction sustains his own decision as consistent with that case and with Brown v. Campbell, (Hopkins, 233.) This last case is also approved, on the same distinction, in the opinion delivered at the general term, by Justice Strong, affirming vice chancellor Parker's decision. He says (4 Barb. 647) “ In Brown v. Campbell Chancellor Sanford sustained the exchange of the notes of the Union Cotton Manufactory for the stock of the Otsego Cot [118] ton Manufactory. That however was not an original investment of money, but simply the exchange of one doubtful security for another, and might have been the best arrangement which could have been made.” This transaction, if the administrator had actively engaged in it, would have been only an exchange of one security or investment not approved by the courts, for another of the like nature, and generally considered at the time, equally safe, and would at that time appear a much better arrangement than a contest with the old bank for the payment of the testator’s interest in the stock—a contest which probably could not end until all the claims against the bank had been settled; and then (if an opinion entertained by many was correct, and the old bank was really insolvent) would have resulted in a total loss of the stock and the payment of heavy costs and counsel fees. In this case quite as much as in Thompson v. Brown, or in Brown v. Campbell, the administrator was justified in suffering the exchange of investments to be made, and ought not to be held accountable for any supposed loss that has resulted. He had no alternative but to suffer the change which at the time must have appeared expedient, or to enter into a controversy which probably would have resulted no better than the course which he adopted. Could an executor be blamed who allowed his testator’s shares in the stock of the chartered Chemical Bank to become part of the stock of the new bank under the general law. It is believed that an eminent lawyer, who held such stocks as executor threatened a suit against the new bank to compel it to allow him to come in and participate in its stock. Yet the banks are,entirely distinct in interest. So it is believed that generally, when the charters of old banks have expired, their stock has been transferred to the new bank of the same name, unless express dissent was manifested; and that such dissent seldom occurred. This shows that the administrator was guilty of no negligence in not interfering with the transfer that was made. [119] [New York General Term, May 7, 1855. The bill should be dismissed; and -as the administrator is not in fault and should not be subjected to the payment of his solicitors’ costs, it is with costs. Mitchell, Clerke, and Cowles, Justices.]